Wages in Scotland have fallen 12 per cent in real terms in the last five years, according to analysis compiled by think-tank IPPR Scotland.

Its analysis found average pay for workers rose eight per cent between 2009 and 2015 – up seven per cent in the private sector and 10 per cent in the public sector - though wage gains were offset by inflation increasing 20 per cent in the same period.

IPPR Scotland said inflation had increased at 20 per cent “by both the RPI and CPI measures”, which it said “implies a fall in real wages of approximately 12 per cent”.

The IPPR Scotland study suggests wage growth in Scotland “outperformed the rest of the UK over the last five years”, notably in the private sector.

Wage growth in Scotland was “driven by productivity increases in Scotland relative to the rest of the UK, and a stronger link between productivity and median pay in Scotland”.

The study adds: “However, both Scotland and the UK underperformed relative to both inflation and expectations for earnings growth.”

IPPR Scotland said the Office for Budget Responsibility (OBR) had forecast in the 2011 Budget, average earnings would grow 21 per cent between 2009 and 2015.

Its latest study suggests private sector wage growth in Scotland is currently 13 per cent lower in the private sector and 10 per cent lower in the public sector than had been predicted five years ago.

The IPPR Scotland report suggests if the OBR's 2011 predictions on wage growth had been met, Scotland's economy would be £11.6 billion – 8.2 per cent - larger than it is at present.

Russell Gunson, director of IPPR Scotland, said: “Our figures show how important wage growth is to the size of the economy in Scotland.

“It's clear that wages and productivity rates in Scotland have performed better than the rest of the UK in recent years, which is very positive.

“However, pay in Scotland today is 12 per cent lower in real terms than it was five years ago, showing more needs to be done.”

Gunson added: “With increased powers coming to Scotland, more of the financial benefits from increased productivity and wages in Scotland will come straight to the Scottish Parliament.

“Therefore, the opportunity will be there to offset some of the cost of the investment required today to attempt to improve productivity, through greater tax revenue down the line.”

Dave Watson, head of public affairs at Unison Scotland, said: “This report highlights the importance of higher wages, not only to workers, but to Scotland's economy and our hard-pressed public services.

“The £11.6 billion gap identified in this report would make a huge difference to the faltering economic recovery.

“In the coming elections, Unison Scotland will be asking political parties to explain how their policies would address the pay gap.”